Indian Contract Act: Consideration & Capacity

Consideration

• Consideration entails an exchange, understood as "quid pro quo," meaning something is given in return for something else.
• It can encompass various forms such as money, goods, services, or even a promise to do something.
• Consideration can occur in past, present, or future contexts, allowing flexibility in contractual agreements.
• Section 23 of the Indian Contract Act, 1872 mandates that consideration must be lawful, meaning it should not contravene legal norms.
• An example of unlawful consideration: Chanderilal's promise to secure a government job for Gadha Prasad in exchange for ₹10 lacs, which creates a void agreement as both the object and consideration are illegal.

The Capacity of Parties

• For an agreement to be enforceable, all parties involved must possess the capacity to contract.
• A contract becomes invalid if any party lacks the necessary capacity.
• According to Section 11 of the Indian Contract Act, 1872, key qualifications for a contracting party include:
  • Must not be a minor.
  • Must not be of unsound mind.
  • Must be qualified by law to enter into the contract.

Free Consent

• Consent among parties requires agreement on the same matter in the same sense for contractual validity.
• Section 14 of the Indian Contract Act defines free consent as being devoid of any coercive factors, including:
  • Coercion: forcing a party to act against their will.
  • Fraud: deceptive practices that lead a party to a harmful agreement.
  • Undue Influence: exploiting a position of power to manipulate another party's decisions.
  • Misrepresentation: presenting false information to influence a party's consent.
  • Mistake: when one or both parties are incorrect regarding a fundamental fact of the agreement.
• Example of free consent: A owns two cars, one Maruti and one Santro, indicating clear ownership and no coercive elements in the decision-making process.